Mr CHESTER (4:52 PM)
—Thank you, Deputy Speaker. I fear the member for Blair is attending the same barber as me. I also join you in commending him for his involvement in the World’s Greatest Shave. I also take up the challenge of the member for Blair to make some constructive suggestions here this afternoon, in relation to electoral reform.

I rise to speak in relation to the Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill 2009. In doing so, I seek to highlight my view that campaign funding is one of the most critical challenges facing our democracy and we have an obligation to improve the current system. After having said that, I do not believe that this bill is the complete answer. It is more about tinkering around the edges and entrenching some competitive advantages, I believe, for the Labor Party, than a genuine attempt at reform. There are elements of the bill which have some merit, and the member for Blair referred to the profiting from public funding issue—and I think that is an important aspect of the bill. But the reform process, in my mind, must be a more comprehensive program and not just cherry-picking to suit one side of politics or the other.

The principles of election campaign funding and political donations and the overall conduct of elections are issues that—I agree with other members who have already spoken—should be above party politics. I believe there is also a genuine mood for reform in the community—an expectation that we will actually improve the current system as time moves forward. I take up the comments from the Special Minister of State, in his message to the electoral reform green paper released in December last year, where the minister wrote:

The perception of undue influence can be as damaging to democracy as undue influence itself. It undermines confidence in our processes of government, making it difficult to untangle the motivation behind policy decisions. Electors are left wondering if decisions have been made on their merits.

I think they are important points that the Special Minister of State made. I highlight the comments because I believe they are the valid principles we should be following in relation to electoral reform. Despite the often expressed cynicism from the voting public about politics and politicians, Australians are proud of their democratic system and they want it protected from any threats.

One of the biggest threats to democracy is the spiralling cost of election campaigns—sometimes referred to as a campaigning arms race. The cost of participating in campaigns and having a realistic chance of winning has spiralled out of all proportion in the past decade. I know from my personal experience as a political staff member for four years and as a candidate at both state and federal level that the cost of participating in elections has escalated to the extent that it threatens the very principle of ensuring that our participatory democracy is open to all credible candidates. From direct experience, the first campaign I was involved in was, I think, in about 1999. It was a state campaign. The candidate had about $20,000 to spend and it was regarded as quite a significant campaign in its time. Then, in more recent times, I was the Chief of Staff for the Leader of the Nationals in Victoria. Any credible campaign in a state seat in Victoria was well over the $100,000 mark, and in some of the marginal areas it was closer to $200,000. I believe we are heading down a path which is fraught with dangers for our democracy. It is hardly a fair system when larger parties are in a position to spend hundreds of thousands of dollars on individual seats, while other candidates have significantly fewer resources at their disposal—even when you take into account where they achieved the four per cent benchmark for public funding.

I believe we need to implement a fairer system, a better system, where there is increased fairness among individual participants in the political process and the public can have increased confidence that decisions are made on their merits and without undue influence. It is my personal view—and I do stress it is my personal view and not necessarily a position shared by all within my own party—that we must head down the track of targeted, and possibly increased, public funding of candidates and registered parties, along with stringent caps on actual campaign spending. I believe there needs to be a greater debate and commitment to wholesale reform, rather than a tinkering around the edges that the bill before the House represents.

In my preferred system, the credible candidates would be entitled to a fixed sum of public funding to spend on legitimate campaign expenses during the campaign. I take up the definition of ‘campaign expenses’ in the bill before the House. The amount of campaign spending would be capped and strictly enforced, and limitations would be placed on any third party contributions or advertising—whether by unions, industry, business or individuals. Some may argue that such a system would amount to a constraint on freedom of speech, and I do not think we should be afraid to have that debate here in Australia. Rather than restrain freedom of speech, I believe a system of capped campaign spending would encourage a diversity of views, as the opportunity to participate in elections would be available to a wider cohort of people.

If, for example, the total cap for a House of Representatives candidate was set about $100,000 in the specified campaign period and all of the credible candidates were guaranteed $50,000 in public funding, the possible candidates would be less likely to be excluded because of campaign cost considerations. In this example, to become a credible or recognised candidate—whatever term you would like to use—for the purpose of receiving public funding, benchmarks could be set, such as being the endorsed candidate for a registered political party or, in the case of independent candidates, there could be a statutory process of officially registering 500 or a thousand local voters who intend to support the individual. I think we can quibble about the details later, but the principle remains the same—that candidates would be on a level playing field, rather than the current situation we are faced with. Each of the credible or registered candidates has access to the same amount of public funding and a cap on how much extra money they are allowed to spend in addition to that public funding. It is there where some of the recommendations of the bill, I think, would come into their own in terms of the transparency of the process and the declaration being timely.

In the example that I am presenting, it would be a $100,000 cap with a maximum of $50,000 coming from fundraising activities. I would argue that, if you cannot get your message out to voters with $100,000, you really do not deserve to be elected in the first place. Keep in mind that the basis for the introduction of public funding was all about reducing the cost of participation in our democracy. The electoral reform green paper highlights the public funding system started with very noble aims indeed. On introducing the bill to amend the Electoral Act in 1984 into the parliament and in subsequent debate, the Special Minister of State at the time, the Hon. Kim Beazley, spoke of a number of purposes of the legislation. They summarise along the lines of fair elections: different parties offering themselves for election have an equal opportunity to present their policies to the electorate. Some of the other expressed aims of introducing public funding were to provide registered political parties and independent candidates with equal opportunity to contest elections, promote fairness in the electoral system between political parties and candidates contesting elections, and promote the integrity of the electoral system by reducing political parties’ and candidates’ reliance on donations, which could compromise their ability to represent their electorates properly.

I suggest that public funding in that regard has not worked; it has not happened. The spiralling costs of campaign funding stand as a testimony to the issues we are facing now with electoral reform, and unfortunately those noble aims have not necessarily been fulfilled, despite the good intentions. At the moment the campaign arms race forces candidates and political parties to go bigger and better, and the campaign is often turned into a contest of marketing dollars rather than a contest of ideas. The Gippsland by-election campaign is a case in point. By my own estimations—and I stress that these are my estimations—the three main candidates representing Labor, the Liberals and the Nationals spent well in excess of $1 million in total on various marketing initiatives. We had the standard TV, radio, newspaper advertising, multiple mail-outs, websites, static signage and mobile signage, to the point where Gippslanders could not open their mailbox or turn on their TV without seeing one of our smiling faces. I can still recall the air of excitement in my own home when my children first saw the ads on telly. They were quick to rush around and find everyone to come and watch them, but by the end of the campaign they were so sick of seeing dad’s face on television they actually started switching channels. Such was the flooding of the media markets by candidates from all persuasions. It was marketing overload, but each campaign team was playing by the rules as they stand and getting its message out to the absolute best of its ability.

I am not criticising the Labor candidate, the Liberal candidate or my own team—which I commended for doing a great job. In fact, they did an extraordinary job in difficult circumstances to win the seat. As far as I am aware, everyone played the game by the existing rules; it is just that I believe the rules need fixing in the future. It was the first time that Gippslanders had experienced the extra attention that a by-election inevitably brings. When all the three parties were acting as if they had a strong chance of winning and spent money accordingly, the mountain of marketing material was difficult for people to come to grips with. The campaign spending really did take a lot of people by surprise as they were swamped with this material. I have received feedback from many constituents, both during that campaign and since, who believe there must be a better way—and I agree with them.

There are many options throughout the world, and the green paper canvases the arguments for capping expenditure in the manner that I have already outlined. The arguments for capping expenditure, apart from the ones that I have mentioned already, include that there is no real advantage for one candidate or party having access to greater financial resources. The caps do create a level of financial equality between candidates in the election—and heaven forbid that they would actually have to win the campaign based on the merits of their ideas rather than the strength of their marketing campaign! Caps reduce the level of election finance needed, meaning that more candidates, including some less wealthy candidates, may compete in elections—and I hasten to add that in our rural and regional areas, particularly through the difficult times we have experienced with drought, flood and now fires, the issue of wealth and the availability of candidates to participate in our democracy is becoming more and more important. Caps also help to contain overall election costs, which in turn reduces reliance on donations and the associated problems I have already referred to. The absence of caps encourages excessive television and other advertising. Many overseas jurisdictions place limits on election expenditure. Of course there are many contrary arguments, and I believe they are all manageable. On a national scene, limitations or caps could be put in place for the broader leadership campaigns which have become part of modern campaigning.

Whatever the cap, it must be stringently enforced, and any breaches would have to be heavily penalised, including the possibility of excluding candidates in the more extreme or deliberate cases of breaching any new regulations. I acknowledge that with such a system there would be difficulties in enforcing those regulations, particularly, I would imagine, in specifying a campaign period and keeping track of third-party spending. It would require further detailed analysis, and I believe that is a challenge for the House. The principle, though, is valid: if we are concerned about the spiralling campaign arms race, we must place caps on campaign spending in the future and nurture the development of a fairer participatory democracy. Part of such a scheme would necessarily entail the need to consider fixed terms, and I do not think we should shy away from that. Many jurisdictions in Australia have already taken that step.

Mr Danby interjecting—

Mr CHESTER
—I am happy to take up the interjection. We are having a broad debate today about the opportunities to improve our electoral operations and I am prepared to argue the case that if you are going to go down this path of capped spending you would have to consider fixed terms; otherwise, the logistics of managing the campaign capping phase would be quite onerous. I present this proposition in an attempt to broaden the debate rather than restrict the discussion to the current proposed measures, which I believe are not intended to provide the major structural reform that Australians are looking for. The measures in this bill are largely an attempt by the Labor Party to cherry-pick for its own electoral benefit. It is not a genuine attempt to reform campaign donations and funding, and should be rejected by the House.

The electoral reform green paper also seeks to encourage public debate about options for improving and modernising Australia’s federal electoral system. I have referred to it several times because I believe it is a very worthwhile document. I note particularly the experiences of other nations, in particular the Canadian and New Zealand experiences. It is argued that Canada, for example, have the strictest regulations of selected countries. It is based on an approach of encouraging small donations from a large number of donors, which I believe would be a positive step. Their scheme aims to limit the funding going into political parties and also caps the expenditure by political parties. Bans apply to donations from corporations, unions, associations and groups, and caps apply to donations to and expenditure by political parties and candidates. At the 2006 Canadian election the expenditure limit averaged Can$81,000 across electorates. The outcome of the Canadian approach, quoted in the green paper, is that the amount of money flowing in, as well as being spent by political parties, has significantly reduced in Canada. New Zealand has adopted a model which utilises a variety of different regulatory tools. For example, to reduce the pressure on candidates and parties to raise money through donations, election expenditure is capped, with political parties able to spend up to NZ$1 million plus an additional NZ$20,000 per candidate. So there are other options throughout the world that I believe are well worth considering. I am sure neither of those nations believe that they have a perfect system. A perfect system probably does not exist, and they are probably tweaking their system as we speak. I think it is inevitable that there will need to be a level of compromise and balancing of the competing demands in any reforms that we undertake now or in the future.

It is worth considering the ramifications if there is no major action on electoral reform in the short to medium term. We need only to look at the experience of the United States to get a glimpse of the future in terms of the extraordinary costs of campaigning. Such costs need to be funded. It is almost inevitable that there will be strings attached, or the perception of strings being attached, to huge donations from corporations, unions and wealthy individuals. We have seen some relatively small-scale scandals in Australia already, and I fear that the prospect of corruption, bribery and undue influence will only increase if the campaign arms race escalates in an uncontrolled manner in the future. There is also the very real prospect that political parties will choose candidates on their fundraising capacity rather than on their capacity to do the job on behalf of their constituents. In a world of uncapped campaign spending, political parties will look to the bottom line and we face the prospect of wealthy candidates effectively buying a seat in parliament in the future. In my view, these are just some of the risks of inaction on campaign funding reform on a broader scale rather than the piecemeal approach we are undertaking at the moment.

I refer briefly to the shadow minister of state in the other place, who has called for a broader approach to the issue. In his contribution to debate on amendments to the bill before the House, the shadow minister said:

Let us have a sensible discussion about where we are going to take the campaign finance reform agenda. Let us work together, which I think we are capable of doing, and let us get an outcome that is an appropriate legacy to restore some confidence in the system …

I am not suggesting for a second that the shadow minister endorses any of my personal views, but he does support the need for a proper debate and extensive reform process, not the cherry-picking or the self-serving changes that I believe we are pursuing at the moment. The green paper also notes:

The accelerating costs of political campaigning create pressures on our electoral system. Consideration needs to be given to how parties, candidates, and other participants in the electoral process, including associated entities and ‘third parties’, are funded and how best to ensure those methods of funding are transparent, open and accountable.

I believe that sums up the considerable challenge we face.

This may appear from the outside to be a dry topic, but I believe that members of our community are very concerned about the perception of inappropriate fundraising or donations to political parties. I think we need to consider the broader issues of how we want to take our democracy forward in the 21st century. Do we want a system where individual MPs spend a significant amount of their time involved in fundraising to secure their seat in future campaigns? Do we want to perpetuate the system where businesses pay thousands of dollars to sit down for a lunch with ministers or others, expecting the community to believe that there are no strings attached? Do we want a system where unions are able to splurge tens of millions of dollars on election advertising campaigns, regardless of the views of their members? Do we want to continue down the path of the campaign arms race, or are we going to get serious about the issue of electoral reform? I believe we must do everything in our power to protect and enhance the integrity of our electoral process, and I fear that this bill falls short of the mark.